14 thoughts on “Crisis Conference Liveblog”

“I can sympathise easily with the resistance many will feel because we again will need to use a large amount of public money,” Mr Dijsselbloem said. “This is why I want the private sector to pay as large a share as possible of the rescue of SNS Reaal”

Even if most English children are as unenthusiastic about learning French as most Irish resident children are about leaning Irish, the latter is more likely to have economic worth to them, and for those that really have not talent/interest in it and for whom it is literally a waste of time – it stops being compulsory and they can study something useful to them personally, like more science, instead.

Anyway, Les Rosbifs are hardly the best example to pick, and, er, they kind of do have a bit of a point about the French insisting English is no more important than French & the awkward squad just refusing to use it even when they could 😉

I sat in on this one out of personal interest and as I feel this blog would be much improved if the range of subjects covered could be increased.

A well chaired meeting with the Minister avoiding political point scoring, listening, nodding and taking notes.

Orla Doyle’s paper was heartening account of a detailed, empirical long term trial (randomised and everything), to see if intervention with disadvantaged mothers from pre-birth to school might help with children’s outcomes. A first for Ireland. Results in up to 18 months so far, but the children in real life are now 4, so the info. is on the way.

Positive outcomes are developing in a very detailed study.

Perhaps a hint of do-goodery and emphasis on economic benefits of early intervention – but it is an economics conference.

Second paper from Emer Smyth more sobering. Essentially a long term set of interviews with pupils from a variety of high schools, largely in disadvantaged areas tracking through from first year to leaving, including keeping up with early school -leavers. Turns out streaming is now largely used in disadvantaged areas. Even the higher streams have worse academic outcomes than the mixed classes elsewhere and the lower stream outcomes, are near enough to nil.

Guess what, children at the age of 12 who, often on very marginal decisions, are put into lower streams, quickly (within 6 weeks), reform their identity as the “thicko’s” their self-esteem is largely shot, and teachers and students set about living down to expectations. I paraphrase a detailed and thoughtful study.

At nine nearly all Irish children anywhere like their teachers. By 13 this is much the same for the middle classes, but amongst working class boys in particular it is collapsing. It would make you weep.

So no, it wasn’t about syllabus or allocation of time, but more holistically about the experience, and outcomes, from school.

Niamh Hardiman got off to a slightly jarring start by thanking the economists for inviting her, a political scientist, to attend. I would have taken the economics-politics link as a given (both with a large and small P), but apparently not always so. God help economics and X if economics and politics is ‘silo busting’. She essentially settled in to a contrast between the actions of the Spanish and Irish governments 2008-2010. Her point is that there are always choices and that choices are not made in a vaccuum, and politics needs to be taken into account. For example, Ireland went for text-book 2/3 revenue cuts to 1/3 tax increases while Spain, cutting later, went for roughly the opposite.

Michael Tafte spoke well and really his mission was to put unemployment at the centre of the debate. His opening remarks, setting economics in a world of conflicting interests were very well said. Quote: “to measure he world is to have an opinion on the world”. A lot, I think, for Michael Hennigan, to agree with here, as Tafte is concerned that a paper recovery, will be considered a success while un- and under- employment stays at one in five for a very long time. He made the point that his union is largely private sector and he wants to see more private as well as public investment. In terms of budgetary strategy he threw out half a dozen budgetary neutral ideas that would increase growth of the kind with which the people on the left/Keynesian of the spectrum (including me), would agree.

Slightly odd chairing from Robert Watt of Dept., of Public Expenditure and Reform as he couldn’t help disagreeing with Tafte afterwards (shades of last year’s odd chairing), but to be fair, he immediately offered Tafte the right of reply.

Frank Barry, with no slides, gave a beautifully lucid, reasoned and informed speech on the European situation picking up from he left off last year. One for DOCM to ponder I think. His case remains that Europe must, like it or not, become more federal with tax and spend powers at the centre, or fall apart.

Barry made the interesting point that as the common market works more successfully (in its own terms), the economies of Europe necessarily become more open, meaning that national fiscal stimulii are more prone to ‘leakage’, thus weakening government.

Colm McCarthy’s thrust was that he was not as convinced as Frank about the need for a proper central European government, but certainly a decent banking union is needed. McCarthy showed how big the European banks are compared to the size of GDP and thus the potential, given they are very unstable things frequently collapsing, they have to bring down countries and economies. He considered bank resolution schemes the most important issue, plus making the banks hold more reserves. His final slide quoted Asmussen’s plan for bank resolution which he called a “giant moral hazard machine”, which will effectively put all European taxpayers on the hook for giant banks.

I whipped in three questions from my usual position at the back:

* Did the panel think that European policy makers were using unemployment to drive down workers rights and wages?

McCarthy: He thought unemployment was an outcome not a tool, but it certainly had effects, but he could only think of M Thatcher who had done it deliberately. Tafte made more points on this and employment/growth friendly policies.

* Did the panel think that coming FTT to 11 European countries would help banks pay for their own future crisis.

McCarthy: Not optimistic about that, but should start by looking at effective subsidies states already gave banks (mentioned in slides), plus for example, the lack of VAT on bank activities.

* Given McCarthy’s paper did the ‘twin pillar’ strategy not put us back into moral hazard and too big to fail territory?

McCarthy: Certainly the other banks in Ireland could be miffed about this, but he thought the problem was more one of oligopoly.

In the comments McCarthy made the interesting comment that the ‘impulse towards consensus’ dogged Irish decision making.

If I have misrepresented speakers, please post.

Thanks to organisers and very nice to meet some bloggers from the website.

I’m fairly good at going up to people and talking, but it takes a bit of nerve, perhaps organisers could look to encourage people to meet during breaks.

The seeming lack of awareness of many economists of the political context in which they are working, and their failure to factor it into their discipline, seems beyond dispute at this stage. In Ireland’s case, as has been pointed out by MH, there is also the curious dichotomy between the consideration of domestic and international issues where the actors in the latter case are seemingly expected to behave in a manner different to that adopted by the equivalent actors back home.

It boils down, in my view, to a failure to take into account that Ireland is a participating state, not an indigent outsider looking to Brussels and/or Frankfurt for assistance.

With an apology for the pun, it could be described as a case of “grate expectations”, to borrow from the comment by Donal Donovan.

On whether or not a “political union” is necessary for a monetary union to work, I am firmly inclined to the view that the answer is no. In any case, the possibility of it happening is near zero. Philip Stephens picked up the theme rather well in the FT.

“During one sticky episode last year, I heard a German official say how lucky it was Britain had stayed out of the euro. Had it joined, it would have run away again at the first whiff of cordite.”

The official in question is absolutely right. The UK would already be out the door – and the euro collapsed – with or without a referendum. This simply underlines the fact that the single currency is a political project but that does not necessarily mean the creation of a political union (which is not even mentioned in the treaties; “ever closer union among the peoples of Europe” is the objective set out in the TEU).

As to the public service reform effort hitherto, there is only one word to describe it; pathetic. The Economist this week devotes a special supplement to the Nordic countries. It should be required reading.

I should add that there is one sine qua non for the success of the euro; a fully functioning single market. The failure to achieve it is collective. But the winners are the countries, notably Germany, capable of running export surpluses.

Niamh Hardiman got off to a slightly jarring start by thanking the economists for inviting her, a political scientist, to attend. I would have taken the economics-politics link as a given (both with a large and small P), but apparently not always so. God help economics and X if economics and politics is ’silo busting’.”

This is a bit strange. Can anyone think of a more incisive political scientist (US politics that is) than Paul Krugman? Outside of some academic departments it is very unusual for turf to be defined like this.

With regard to unemployment as a tool to reduce wages, this was not the real aim of the Thatcher government in my view. There was an inflationary culture, and inflation.

If you looked at graphs of “number of days ‘lost’ through strikes” and “unemployment rate” and similar series there was a clear mirror image. What they were doing, and many Tories genuinely refused to entertain this analysis – as it was thought unacceptably ruthless – at the time, was to get “strike days” down via increased unemployment – reducing union power in the process and thereby reducing the capacity of the workers on average to re-engage in another wage-price spiral.

In that inflationary environment it wasn’t reduced wages, but rather close to or sub inflation wage rises they were trying to achieve.